Store closures on the way? Did someone mention Brexit?

Dixons Carphone execs handed out their numbers to world+dog today, showing profits plummeting by more than half in the firm’s half-year results. The plunge was chalked up to UK customers skipping mobile upgrades - a move that could signal further closures across its stores.

For the six months to December, group profit before tax dropped to £61m, compared to £154m the same time last year, and sales fell 3 per cent to £4.6bn.

Profit in the UK and Ireland plunged 73 per cent to £34m from £130m the year before. However like-for-like sales, taking into account its existing store closure programme, were down 2 per cent to £3bn.

During 2017 DixCar shut 134 stores in the UK, as part of its 3-in-1 store concept, merging the PC World and Currys outlets into its Carphone Warehouse stores. The company now has 1,078 shops in total with around 700 Carphone Warehouse stores.

Group chief exec Seb James said:

"We recognise that the performance of the mobile division needs addressing, and are taking action to adapt our model in order to cement our place in a changing world.

"We will update the market on these developments in due course, but we believe that we can, over time, reduce the complexity and capital intensity of our mobile business model, and increase the simplicity and profitability of what we do.”

James said the UK postpay mobile phone market was "tougher", with a combination of "higher handset costs and relatively incremental technology growth" continuing to cause customers to hold on to their handsets for longer and some to choose a SIM-only deal ("in the meantime", he added, hopefully).

The late launch of the iPhone X, which fell outside this half-year for the company, also affected sales.

The CEO has previously said that the decline in the pound since Brexit also means mobile handsets have become more expensive.

Kester Mann, analyst at CCS Insight, said: "The results reflect a still highly challenging mobile phone market in which customers continue to hold on to their devices for longer in the face of plateauing innovation."

He said CCS Insight anticipates the market for mobile phones in the UK will fall by nearly 6 per cent in the full calendar year of 2017.

However, he noted DixCar will probably see a bounceback in phone sales in 2018, as iPhone X sales make an impact on its balance sheet. ®